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Heineken NV’s (AMS:HEIA) Earnings Grew 10%, Did It Beat Long-Term Trend?

When Heineken NV’s (AMS:HEIA) announced its latest earnings (30 June 2018), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Heineken’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not HEIA actually performed well. Below is a quick commentary on how I see HEIA has performed.

See our latest analysis for Heineken

Commentary On HEIA’s Past Performance

HEIA’s trailing twelve-month earnings (from 30 June 2018) of €2.0b has jumped 10% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 0.3%, indicating the rate at which HEIA is growing has accelerated. What’s the driver of this growth? Well, let’s take a look at if it is only due to industry tailwinds, or if Heineken has seen some company-specific growth.

ENXTAM:HEIA Income Statement Export December 9th 18
ENXTAM:HEIA Income Statement Export December 9th 18

In terms of returns from investment, Heineken has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. However, its return on assets (ROA) of 5.9% exceeds the NL Beverage industry of 4.9%, indicating Heineken has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Heineken’s debt level, has declined over the past 3 years from 10% to 10%.

What does this mean?

Though Heineken’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research Heineken to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for HEIA’s future growth? Take a look at our free research report of analyst consensus for HEIA’s outlook.

  2. Financial Health: Are HEIA’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2018. This may not be consistent with full year annual report figures.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

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